In the past it was a good idea to get a loan to purchase real estate. Now with all the problems in the real estate market, it MIGHT be harder to get a loan. Tell us more. What part of the country?? How is the real estate and rental market?? What is your background?? Do you own real estate?? Where would you go for a loan?? Do you have an Accountant?? Lawyer?? The more you share, the better we can answer your questions LUCKIEST
I bought a foreclosed house, fixed it up and am renting it now. I got 100% financing which was nice, but will most likely be very difficult now. I only got 100% because it was my first home purchase and there was a community program. A bank will more than likely want 20% down on any type of investment property and your rate will not be the same as you first residences rate.
If you know you can generate postive cash flow from the rents and know you can find good tenants in a good neighborhood, it might be worth investing. My advice is avoid buying that $20,000 property in a more depressed area thinking you will be able to sell it at a high profit in a year or two or that you will be able to rent this property and generate huge cash flow. Areas like that can be gold mines, but they can also lead to poor tenants who don't pay rents on time (or at all), don't maintain the property, or are a nightmare to deal with. Not to mention reselling the property can be much more difficult to sell in the future.
For a first endevour, stick with a solid market with solid employment and low crime. You margin might be less, but you will be able to better understand how being a landlord works and it should be a much smoother process.
As a former mortgage broker I can speak with some, however little, authority on the subject. The name of the game is cashflow. You need to know what the property will command in the open market for rent and you should have a mortgage payment, including taxes and insurance, less than that. You also need to have an idea of what the costs will be with fixing the property. Also, keep in mind that the opportunity is there if you have the capital to back it. You will not get a 100% Loan-to-Value loan on an investment property so having enough for at least a down payment can be challenging for some, let alone the cost of repairs. Take this into consideration, but keep in mind if you have the capital it can be a very rewarding investment. Please contact me if you have any questions. I'm new to the forum, but if you know how to send a private message do that or just respond.
Purchasing a cash flowing property is a source of long term wealth. Your tenants are paying you every month and your mortgage. The most difficult aspect of rentals is the management and potential liability. If set up correctly though, you can sit back and enjoy the benefits.
In general, it's a great idea. Whether it's a good idea for you - right now - where you live - is another question (or series of questions).
Can you acquire a suitable property at a bargain price (i.e., can you fix it up and start producing revenue fairly quickly, and after you make the necessary repairs, will your total investment still be less than or close to the selling price of comparable homes in the same neighborhood)?
Can you keep it rented (is there an existing shortage of similar rental property available for the type of tenant you have in mind, and would such a tenant want to live in that house in that neighborhood)?
Can you make a profit (will the rent your tenant is willing and able to pay exceed all your monthly costs including taxes, insurance, and maintenance)?
Can you be a landlord, or as an alternative, make enough extra profit to hire a property management firm (do you have the skills and temperament to collect rent, handle excuses, respond to maintenance problems at all hours, etc.)?
If the answer to all those questions is "yes," real estate is one of the best ways there is to make money and build wealth -- the info-mercials aren't lying about that. Fortunately, most of the data you need to answer the above questions (relative to your area and situation) is readily available. Just do a little research on your local housing market and you should be able to make a sound decision.